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Proration and credits on plan change

Joe Daniel

What happens during plan upgrade and downgrade in terms of proration and credits in the middle of a billing cycle?

1 Comment

Joe Daniel

said
about 5 years ago

1. During plan downgrade:

When a subscription is downgraded, ChargeBee calculates the amount for the remaining period of the new plan and adds that as a line item to the invoice generated during plan change. The balance amount from the original plan (if any) is added as credits to the same invoice.

Example:

Billing Cycle: 1 Apr to 1 May

Current Plan: Gold - $30

New Plan: Silver - $15

Plan Downgraded On: 5 Apr

There are 26 days remaining (Apr 5 to May 1), and so there is a credit of $26 generated. The new plan amount would be $13 for the remaining days but since there is a credit amount, there is no charge applied to the customer.

Here's a sample invoice that shows that:

The credit balance ($26 - $13) is added to the subscription and will be applied on the next renewal.

2. During plan upgrade

Similarly when a subscription is upgraded in the middle of the billing cycle, ChargeBee calculates the amount for the remaining period of the new plan and adds that as a charge to the invoice generated during the plan change. The balance amount from the original plan is added as credits to the same invoice.

Example:

Billing Cycle: 1 Apr to 1 May

Customer upgrades from the Silver plan to the Gold plan on Apr 5.

Customer has to pay for the Gold plan for 26 days and gets credits from the Silver plan for the same remaining period. So the total amount the customer has to pay is $13.

Here's a sample invoice that shows that:

Note: Proration occurs by default when a subscription is changed. If you need to disable proration, you need to explicitly specify that through the admin console or the API. Click here to read more about proration.